Drawing from existing RES or RES-orientated business configurations, the following six participatory business models (PBMs) highlight the types of organisation and control structures available to community-led organisations. They also suggest the transformative potential such social innovations have in altering the regulative, normative, and cultural dimensions of the energy transition [86]. While they are not entirely insulated from negative externalities, they do demonstrate how RES projects can be operationalised in ways that are fairer and more equitable to those living near such developments. This is extremely important given the profound social, economic and technical transformations that are required to precipitate the energy transition. Four of the scenarios are focused on energy production, one on energy purchasing and one on financial services to stimulate regional regeneration in keeping with energy transition goals. All are focused in promoting energy conservation and, taken together, demonstrate the scope and applicability of the tool for helping community-led organisations envisage the energy transition pathway best suited to them, while remaining cognisant of locally specific, socio-environmental considerations.
PBM 1: an energy purchasing cooperative
Concerned about rising energy costs, a group of local people establish a group energy purchasing scheme to increase their collective bargaining power and negotiate more favourable energy pricing for its members. They establish a consumers’ cooperative and open membership without discrimination to all residents and micro-businesses in their area. Ownership of the cooperative is directly vested in its members, each contributing equally to the capital through membership subscription. The cooperative is an autonomous organisation controlled by its members, all of whom have equal voting rights (i.e. one member, one vote) and actively participate in establishing policies and making decisions. The membership elects a management board to oversee governance of the cooperative. A general manager is appointed by and is answerable to the board, and runs the cooperative on a day-to-day basis.
The cooperative organises and acts as an energy reseller to its members. Dealing directly with the energy supply company (ESCO), which is linked to the national grid, the cooperative manages the payment and supply arrangements of its members. Members do not deal with the ESCO, but instead are invoiced directly by the cooperative. Surpluses are used to build the cooperative and to provide rebates to members in proportion with their energy purchasing. In addition, members have agreed for management to establish a number of ‘easy payment’ options to help financially vulnerable members remain in the cooperative. The associated societal benefits range from more money circulating in the local economy, to establishing stronger personal networks with members meeting wider societal challenges in a more coherent and equitable way (e.g. see [87]).
This community approach involves a minimal number of key stakeholders as, invariably, the relationship between the ESCO and the community is conducted through the energy purchasing cooperative. Reactions to this social innovation were quite positive, as illustrated in Fig. 3 below, with respondents recognising the operational potential for such a scheme in their area. Also, its capacity for greater local agency with regard to energy pricing and consequently, in terms of access to adequate energy supply, was seen very favourably. Rather than relying on what were perceived as unaccountable commercial entities outside their community, participants called for much greater support for capacity building especially in terms of citizen (as opposed to consumer) agency. While it can be seen as close to traditional consumer power narratives, participants did recognise the transformative potential of this PBM. They especially related to the citizen dimension of this model with its deliberative approaches to membership and social cohesion. They also noted an opportunity for further local wealth-generating potential once the project was up and running, in addition to the intangible community benefits arising from supporting energy vulnerable members in their communities. However, it was clear to every participant how this model might impact on wider infrastructural configurations, or indeed with regard to its extra-local wealth-generating potential.
PBM 2: a commercial wind farm project
Members of a local community decide to approach a commercial wind energy company to develop a wind farm in their area. They are already involved in local businesses and recognise a new commercial opportunity. After consulting their municipality’s development plan, they approach local landowners to assess the level of local interest for such a project. They establish a Community Development Association (CDA), electing a three-person sub-committee to carry out research, liaise with community members and approach a suitable wind energy developer. The CDA is not-for-profit and voluntary. Working with the wind energy company, members of the CDA set up a local company to oversee the planning application and any community-orientated incentive schemes, a common practice in a number of EU member states. The new company is essentially a subsidiary of the commercial wind company.
Given the technical complexities, economies of scale, capital costs, and funding challenges in developing a commercial wind farm the parent wind energy company leads much of the planning application, construction and grid connection phases of the project. Electricity produced from the wind farm is fed directly into the national grid at a fixed rate, under the national Feed-In Tariff (FIT) scheme. An annual community fund is also established to finance local sporting and cultural events in the area. This fund is managed by the CDA, which also holds shares in the subsidiary company. In addition, a facility was established at the beginning of the project where local residents can purchase shares in the subsidiary company and avail of the annual dividends accruing from any profits madeFootnote 6.
This model has potential to be a viable community-orientated project, especially when collective decision-making is carried out in a cohesive and positive manner [89]. However, very often the role played by local communities is a minor one, with landowners (who host the wind turbines on their properties) and those sitting on the CDA sub-committee having the most local control in this type of project. As a result, there is considerable potential for animosity or for wider community resistances to emerge. The curtailing of community agency, largely framed by the CDA-managed fund, also has the potential to compound grievances rather than to mollify them. While this type of project has a strong local focus, especially in geographic terms, a number of participants (from their own experience) recognised that such projects are vulnerable to being co-opted by more powerful actors. These can comprise wealthier individuals living in the area, the wind farm developer, etc. As a result, local control, local ownership, community participation and community benefit all scored low with participants. The project’s potential for generating wealth for the local community, in the absence of clearly-defined mechanisms for citizen participation, was considered limited. Usually, it is the landowners (who directly benefit from construction and rents accruing from siting the turbines) and to those who have the financial means to make significant investments in the project that benefit the most.
Participants pointed to the absence of any substantial community benefit beyond supports for local sporting and cultural events (see Fig. 4). It was suggested local support might increase if this fund was extended to help with energy retrofits or insulation upgrades to existing housing stock in the area. As one participant put it, any negative attitude to this type of project would drop significantly if local people were able to (financially) benefit from the project even if such benefits were relatively small in terms of overall development costs. As is presented here, most participants we engaged with see the majority of profits from this type of project leaving the local area to be accumulated by individuals and businesses operating at the national or international level. Also, while they did see strong potential for infrastructural change this was not always seen in wholly positive terms, but rather as something of a burden given the perception of limited financial gains to be made locally.
PBM 3: a locally owned (hydropower) renewable energy project
A community cooperative establishes a subsidiary company to develop a hydro-electric scheme on a local watercourse, which flows into a designated national park. A key goal of the project is to supply local residents and businesses with electricity at reduced rates, in addition to generating a sustainable long-term income for the area. A portion of the annual income is put into community-orientated projects that benefit the wider community. These include providing free home insulation to energy vulnerable residents who cannot afford such upgrades and zero-interest loans to those who can. This has resulted in over half of residents in the area upgrading their dwellings to higher energy efficiency standards. Another more ambitious plan is underway to make the local village at the centre of this community carbon-neutral.
The subsidiary company leases approximately ten hectares of land, running adjacent to the river, from the national forestry body, which owns the land. Under national legislation of the member state in question, this body is obliged to give local communities the opportunity to lease or buy national forest so long as it is for public benefit. The scheme generates enough electricity annually to power over 300 homes, with a projected income of several million euros over a projected 20-year period. Capital for the development came through a start-up grant from a national seed fund, followed by a pre-planning loan from the same agency. Additional monies were secured from a well-respected international sustainable bank and funding from national agencies tasked with supporting community projects.
This participatory business model most closely matched the expectations of participants who recognised the potential benefits for local people across a range of measures (see Fig. 5). These included its capacity to instigate significant changes to local infrastructure and the local economy, resulting in a positive impact on the lives of local people. The only measure that did not score highly, again reflecting participant perceptions, is in its extra-local wealth-generating capacity. However, this was not seen as necessarily a bad thing for most participants. The economic benefits from renewable-energy generation to the local economy include local employment creation and the subsequent ancillary business activities that emerge from services related to the project [20].
Potential shortcomings include it is very geographically specific and technically challenging. Also, it is very much reliant on government support (such as the public benefit leasing) that may not currently be available in other member states. Lack of government support at the national level [90] and at the local level [91], while not always overtly presented as such, can reflect a certain bias towards large-scale, centralised energy systems. This runs contrary to the more dispersed energy system models that community energy initiatives encourage. Having said that, it does meet many of the participants’ expectations for stimulating suitable citizen participation and has good replicability potential. Participants recognised that as more community members engaged with (or were positively impacted by) the main project and its ancillary activities, there would be a correlating increase in citizen participation in the project.
PBM 4: a farmer-owned biogas cooperative partnered with a district heating cooperative
A group of farmers want to find better ways of storing and disposing of animal waste from their pig-producing and other livestock enterprises. A biogas production facility is proposed, and a feasibility study conducted. At the same time, other members of the same community want to instal a combined heat and power (CHP) plant to generate electricity and provide district heating to local residents. The two groups agree to work together in developing the biogas and CHP facilities. Initial scoping surveys are carried out to gauge interest and to clarify the attitudes of local citizens. During this initial phase, the two organisations agree to establish two separate cooperatives. The first, the farmer-owned biogas cooperative, uses pig slurry from members’ farms and a range of other organic wastes to produce methane gas. This biogas is then received by the second coop (a district heating co-operative) that runs the CHP plant supplying heat to local consumers. These include a school, a nursing home, a sports complex and a number of private homes and small businesses.
The two cooperatives are closely aligned in a number of ways with both having interlocking business relationships and shareholdings. This system allows both cooperatives to engage in long-term planning and a certain amount of strategic visioning. The biogas cooperative is governed by a board of directors, with a full-time operations manager responsible for the day-to-day running of the plant. While the CHP cooperative is organised along similar lines. The boards of the biogas and CHP cooperatives each have a minority representation from the local municipality, whose members act as administrative advisors overseeing activities and operations especially in terms of good governance. In addition, the district heating cooperative has integrated support structures for energy-vulnerable members and works closely with the local municipality to best meet the needs of those members.
There are a number of positive social, economic and environmental dimensions to this model (see Fig. 6). Similar to locally-owned RES project mentioned earlier, the potential for positive outcomes in terms of local control and ownership is strong. In Denmark, for example, Hashøj Biogas Cooperative provides gas for the local CHP plant owned by the Hashøj Kraftvarmeforsyning Cooperative. Participating farmers work together effectively sharing the risks and rewards and reducing individual investment exposure. Moreover, the arrangement adds value to farm wastes and allows them access to new markets. Actively working to resolve issues with local residents also helped generate greater goodwill in the local community [17].
Our engagements with the participants highlighted a number of notable caveats with regard to community participation. Biogas producers face considerable regulatory and social challenges compared to their natural gas rivals, with local resistance to a biogas facility being a strong possibility for many projects. Such negative externalities have led to changes in national case-law in the Netherlands, for example. Changes to the legal status of biogas plants there led to increased development delays and even the abandonment of some projects [92]. While an egalitarian approach to community participation is possible, again there needs to be very clear defining of the organisational visions and structural arrangements for both cooperatives. These must be factored into the planning from the very start so as to ensure members who potentially might be energy vulnerable are also fully considered. This would also help prevent perceptions of unfairness informing the narrative between the two cooperatives and the wider community. Having said that, the wealth-generation potential (particularly at the local level), in addition to its capacity for infrastructural change at both the local and extra-local levels, is considerable.
PBM 5: municipalities, universities, schools and hospitals (MUSH) energy producer
In this model, the mayor of a municipality establishes a local community-owned project with the objective of increasing the uptake of renewable energy in the area through the installation of RES systems on public-owned buildings. In addition, the municipality implements a suite of strict energy efficiency measures that these buildings must abide by. A MUSH cooperative is established with public building owners/occupiers becoming its members and investing in local renewable power generation.
After consulting with energy experts, the MUSH cooperative decides to invest in solar photovoltaic (PV) arrays mounted on the roofs of two public education institutions and a hospital. Electricity produced from each PV plant is used onsite with any excess electricity being fed directly back to the national grid. Installing PV panels on these buildings means that the energy is produced where it is needed, in complex buildings with high energy demands (usually a combination of electricity, heating and cooling). The cooperative assists its members in installing renewable energy infrastructure and supports them in their environmental, educational and community work. It is not a solely for-profit arrangement. Income from the sale of electricity is used by the MUSH coop to recoup the cost of the solar panels and a projects fund is established. The first project, an energy efficiency programme, includes insulation upgrades in a number of school and hospital buildings along with optimising and/or upgrading of existing heating systems. From these measures, the energy demand of these public buildings decreased by over 40%.
The MUSH sector is increasingly recognised as an emerging area for novel business models around energy efficiency and building retrofits, especially by ESCOs looking to leverage public funding initiatives or applicable governmental tax credits [93]. There is significant latent capacity in this area considering the amount of publicly-owned buildings in the MUSH sector across the EU. With energy efficiency standards only set to increase further over the coming years, public organisations are beginning to look for solutions that improve their energy efficiency profiles and reduce their overall energy usage [36].
Schools and universities, in particular, have sizeable institutional capacity in this regard given their role as centres of expertise, the very significant property portfolios in their possession and their commitment to civic and community engagement. The experience of Schools’ Energy Co-operative, in UKFootnote 7, highlights the potential of this scenario for increasing public acceptance of RES and improving ‘energy literacy’ in the wider community. Securing a local, sustainable and secure energy supply (with the added benefit of boosting employment and increasing community resilience) is also an attractive prospect for a growing number of municipalities. Municipalities also very often own or manage significant property portfolios and have considerable expertise to share with emerging community-based renewable energy projects. However, this expertise can vary quite considerably. Having said that, as with universities their proximity to local populations potentially gives them a key transformative role in the decentralisation and democratisation of the energy sector.
The participants recognised the community benefits associated with this model. However, there was concern regarding the efficacy of this approach (see Fig. 7). Without clearly referenced mechanisms to ensure local community involvement such projects can end up being tokenistic or non-participatory. Since property rights etc. rest with the MUSH actor, mechanisms would need to be put in place whereby local people could become shareholders in the project or lease the space needed to erect their own energy installations. For instance, in the municipality of Tubbergen in the Netherlands, a MUSH community energy initiative was rejected by the local authorities. This led to many progressive pro-climate citizens becoming more sceptical of this type of model and the role played by local governments [94]. Consequently, local control is marked down while the score is higher for community participation and local ownership. These criteria still score lower than for some of the other models mentioned above. Again, participants were keen to see how supports for more vulnerable community members can be incorporated into these types of project. The wealth-generating capacity at both the local and extra-local level is strong given the size of some of the stakeholders.
PBM 6: an environmental finance service
A group of local landowners want to improve biodiversity in their area, which has also seen a steady decline in population in recent years given the limited opportunities for younger people to live and work there. In response to the land abandonment issue and the socio-economic infrastructure pressures associated with it, they decide to implement proven nature-based business models that prioritise the restoration of the self-sustaining ecosystems that originally existed in the area. They approached a non-governmental organisation (NGO) that supports rewilding enterprises and acts as a platform and network for rewilding projects across the EU. As part of the rewilding project they also wanted to improve the energy security of local people still living in the area.
With the NGO’s help, they leverage existing funding to secure loans from a European investment bank focusing on nature-based business creation and additional backing from a European capital financing facility also engaged in this area. The project involves a series of educational programmes for landowners and local residents, as well as other technical, financial and promotional supports that encourage active rewilding of land no longer in active agricultural use. In conjunction with these rewilding efforts, a greater emphasis is now placed on developing more dispersed, micro-power generation and energy configurations that have the least environmental impact. The group secures a national grant to develop these RES projects, in addition to integrating energy efficiency measures such as insulation retrofitting and solar thermal (and photovoltaic) installations on existing residential and commercial buildings into their business model.
Participant perceptions of this type of participatory business model ranged from some degree of awareness to very little (see Fig. 8). However, it does match the sentiments of a number of participants who expressed a strong desire to move away from what they consider to be weak rural economic models that encourage suburban sprawl, long-distance commuting and dormitory lifestyles for rural dwellers not working directly in the agricultural sector. While it is acknowledged that it has considerable community benefit potential, particularly beyond the energy sector, there was a degree of uncertainty as how it would contribute to the energy transition in a systemically-meaningful way. Our discussions with the participants indicated that not everyone is able to identify the (sometimes opaque) linkages between wider societal behaviour and practice, and the energy system as a whole. This can be explained by the ubiquitous nature of energy in our day-to-day lives and a tendency towards seeing energy almost exclusively in terms of technology and the infrastructural configurations it inhabits. This was very much evident in our early engagements with participants. How we configure the energy system very much depends on wider societal trends regarding behaviour and practice, as this model very much demonstrates.
The shift away from single-sector employment, in this case agriculture, to more diversified income streams associated with wildlife and nature-based tourism offers a number of, if sometimes indirect, benefits to both the local and national economy. For participants, access to new employment opportunities that provide greater income security and work-life balance featured highly in our community engagements. The potential for bringing about significant infrastructural change, both in terms of moving away from older technologies and/or practices, as well as instigating new ones, is another positive feature of this model.